Michael Babcock

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Professor Michael Babcock was a Cash-for-Comments Economists Network member from Kansas State University who worked for the Tobacco Institute, the propaganda arm of the tobacco industry. Professor Babcock was recruited about 1986 in the Phase 3 development of the network when it was expanded, with the aim of having one professor of economics in each state who would provide services on-demand to the tobacco industry. These were all compliant academics, willing to write and say anything their cash-paying customer wished them to write or say.

At this time network members were being paid an annual retainer (roughly $1000 pa) and a fee for each service provided. This was in the region of $1000 for writing an op-ed article for a local newspaper on a theme developed by the Tobacco Institute, with an additional bonus if they contacted and lobbied their local Assemblyman or Congressman/woman. It rose to about $3000 a time over a decade or so.

During this phase they extended the network from about 30 active members to nearly double this size with one professor of economics available in each state (and two in some states). As members dropped out, the gap was filled by other members recruited from the Public Choice Society by Robert Tollison and James Savarese.

HOW THE NETWORK WORKED

The Cash-for-Comments Economists' Network was run by Savarese through a partnership with Professor Robert D Tollison who used the staff and facilities of the Center for Study of Public Choice at George Mason University to prove cut-out and organisation services. They developed and maintained a network of Economics Professors with at least one on tap in virtually every US state. As one Professor transferred or dropped out (there was a regular turn-over) a new one would be recruited in that State. In all, about 130 university professors were involved in the period 1985-1995, and costs ran to $3 million/year at a time when professor's salaries were in the $30-40,000 pa range. An active network member at a State university could almost double his normal salary.

The main focus of the group was to write commissioned op-ed articles on a subject determined by the Tobacco Institute. The draft article would then pass back through the network to TI staff, who were essentially public relations experts. Here they were 'improved' and refined; then sent to the Institute's outside lawyers for vetting. Modified articles then returned to the professor, who would then send them to a designated State newspaper as if they were his 'independent expert opinion'. The professors received a base amount for writing and bonuses for successfully planting the article on the newspaper. Some, but not all, received a small (eg.$1000) annual retainer.[2]]

Published papers would also be copied by the professor and sent to his local Federal Representative and Senator (for a further bonus). Sometimes there were special commissions, but generally the work was writing op-eds and LTE's where they were paid just on results (varied from about $700 to $3000 over the years). Network members could also be called upon to provide witness services and promote the cigarette companies' political/economic line at local ordinance or State legislative hearings. An active professor of economics at a State University could almost double his salary with these activities and with some further appearances, for instance, speaking on the importance of cigarettes in economic terms at major economic conferences, etc.

Phase 3. (May 1984) Tollison and Savarese now established the cash-for-comments network for the Tobacco Institute using the Center for Study of Public Choice at George Mason University as a money laundry channel. They recruited 42 professors (they claimed) from the Public Choice Society (some didn't last long) before the end of 1985. Their task was mainly to write op-eds on specified subjects for their local newspapers, and they were paid a bonus for contacting their local Assemblymen and Congressmen. They were also to be available to the tobacco industry's State lobbyists as 'independent' witnesses at ordinance and Congressional hearings on workplace smoking, etc. (The promised 'secrecy' was not well preserved within the Tobacco Institute).

Phase 4. (c 1986) Savarese and Tollison now formed a formal partnership Savarese & Associates and expanded the network to include at least one professor of economics in each State (some States had two). Payment was increased; there was a regular turnover, but the numbers stabilised. Eventually the Tobacco Institute became annoyed with the mark-up that the partnership added to its bills, and sent in the auditors. They didn't like what they found.

Phase 5. (c. 1996) The Savarese/Tollison partnership continued with a few of Tollison's close associates, but the bulk of the network broke away and began to operate directly to the Tobacco Institute under the leadership of Robert Higgs and William Shughart through the Independent Institute think-tank.

Documents & Timeline

1988 Apr 25 NorthWest Airlines had just implemented the first ban on short domestic flights

1989 Jan This is theTollison/Saverese network list for 1989. It has 64 names, but it still doesn't cover all 50 States. Some States have two or three network members, so newspapers [and sometimes Congressmen] need to be specified for each member to ensure there is no accidental duplication.

Telephone numbers (office and home) are often included in case an urgent op-ed or ordinance hearing needs to be serviced. These are grouped by State:

KANSAS

Professor John S Howe School of Business, University of Kansas, Lawrence, Kansas 66045, 913-864-3536

1989 April 23 The FAA formalised a temporary ban of smoking on domestic flights following the success of NorthWest Airlines, and the Tobacco Institute was turning out its lobbyists to convince the other airlines that smoking bans of any kind were a bad idea. The economists were central to this propaganda project.

Michael Babcock (Kansas Uni) wrote "Good service, not gimmicks win fliers'" for the Topeka Capital-Journal which suggested that Northwest was a dangerous and unreliable airline, and that it should concentrate on maintenance and safety rather than persecuting smokers.

Michael Kurth, (McNeese State) wrote '"Market forces are the best way to guarantee freedom." for the Shreveport Journal. He saw it in personal freedom terms:

The political remedy to social conflict is to ban "offensive" behavior. In a democracy, that usually means the behavior of a minority. That is what the Federal Aviation Administration did when it banned smoking on all airline flights lasting more than two hours. Some air travelers were offended by the smoking of other passengers, even though the smokers were isolated in the back of the plane.
But by what criteria were their preferences elevated and satisfied over the preferences of smokers?

Ryan Amacher (Clemson University) produced "Eliminating choice failed marketplace test" He claims that the Northwest Airlines experience had been a disaster (in fact it was highly successful). He also suggests Northwest was a dangerous airline to fly.

Jeffrey R Clark, (Uni of Tennessee) had "Focus on service would help airlines most." in the Memphis Commercial Appeal .

Michael Davis (Southern Methodist University) had "Smoking ban gets good test." in the Times Herald

William Hunter (Marquette Uni) had "Airline smoking ban example of free-market conflice resolution." in the Capital Times. . He damns the Northwest policy for "failing the market test" and praises those airlines which were competing without smoking bans. [4]

1988 Dec At the beginning of 1988 Northwest Airlines had successfully banned smoking on all its US domestic flights. A majority of both smokers and non-smokers agreed with the ban when polled. Then in April 1988 a two-year trial smoking ban on all domestic flights of less than two hours duration had been introduced by the FAA.

The tobacco industry had flown into a panic since their own polling showed that a majority of airline passengers (smokers and non-smokers) were reasonably happy with such bans. They therefore instructed the cash-for-comments network economists to write articles attacking the financial stability of Northwest, attack its safety record, and preaching the need for smoking 'tolerance'.

The resulting articles generally took the line that Northwest Airlines was suffering financially... when in fact, the ban had been generally successful. This was, in fact, a clear attempt at influencing the stock-market to put pressure on airline management.

[Many of the writer knew so little about the smoking ban that they confused the Northwest Airline ban with the later FAA trial.]

1989 Jan 11 The Tobacco Institute's Scientific Consultancy Activity 1988-89. This is an 80 page mixed bag of files dumped together. [The first is from 1990]

Pages 3 to 23 It begins with Witness Appearances in 1988 and 1989 involving both "Indoor Air Quality experts" who work for the Tobacco Institute, and three economists [Bob Tollison, Richard Wagner and Dwight Lee]

Pages 24 to 31 Labor IAQ Presentations in 1988 and 1989 which involves key figures in the labor movement and a few "IAQ experts."

See page 54: Tobacco Institute "Confidential" memo on '"Tax Hearing Readiness" which is their battle plan to counter earmaking of cigarette excise taxes to fund health programs. It lists a large number of organizations and a few congressmen who can be relied on to help. It also has both primary and secondary lists of economists from Tollison's "cash-for-comments" network willing to give testimony.

Other Network economists [see Secondary attached list below]
Due by mid-year is a book examining earmarking and 'user fees' from a public choice perspective. The treatise will contain 8-10 chapters written by respected economists, including, Henri LePage and Nobel laureate James Buchanan.

The Tobacco Institute's list of cash-for-comments professors and senior academics who were available to write op-eds and give evidence at Congressional hearings, etc. had grown extensively.

[Note: TI budget papers show that each op-ed now earned the economists $3,000. Presentations to conferences earned them $5,000. Savarese was paid $70 to $100,000 pa for this project, and Ogilvy & Mather $250,000.]See page 5

1989 Feb The Tobacco Institute's report on its Communications Activities [with a a focus on blocking smoking bans on airlines] says:

The 2/9/89 issue of the Journal of the American Medical Association published a report on smoking aboard aircraft.

The Institute responded and issued a press release (copy enclosed). Aggressively promoting the position that the study does not support a total airline smoking ban, TI speakers pressed our position in a number of interviews with print and broadcast media. Press reports and transcripts are enclosed.
Three reviews (copies enclosed), giving Northwest Airline's smoking ban a failing grade, were published.[... all by network members]

William Hunter, association professor of economics at Marquette University, in the Capital Times (Madison, WI); and

Michael Babcock, professor of Economics at Kansas State University, in the Topeka Capital-Journal. [7]

1989 Apr 18Susan Stuntz (Issues Manager) at the Tobacco Institute memoes her boss Sam Chilcote. She is sending him material previously used for a two-day "Gerry Long" presentation. He wants to use it in a shorter one-day (unspecified) briefing session.

[Note: Gerald H Long was the CEO of RJ Reynolds who in 1988 had just taken over as Chairman of the Tobacco Institute's Executive Committee and wanted to make changes.][8]

[Generally the articles were cleared by the internal staff at the Tobacco Institute, and only refered to an outside lawyer if there was likely to be some legal problem.]

This draft document has a small number of additions and deletions made by the Tobacco Institute and/or its lawyers. [11]

1990 Mar /E Babcock's tobacco-industry article Excise taxes -- the right solution? was published in The Manhattan Mercury . [12]

It also appears to have been re-written and published in a slightly different form in the Topaka Capital-Journal on March 9 [presumably earning him a double fee from the Tobacco Institute]. There is no mention that this was written for the Tobacco Institute of course. See pages 7 and 18

[As with all of the articles written for the tobacco industry by these Public Choice economists, they show exaggerated concern over the 'regressive' nature of excise taxes. They shed crocodile tears on how cigarette taxes impact on the poor [who also have relatively higher health costs if they smoke.]

The same economist that rail against health care reform and are in favour of cutting income tax rates for the rich! The inconsistency of this position doesn't seem to dawn on them.]

1990 Mar Tobacco Industry -- Resources available. He was responsible for Excise Tax/"user fee" an op-ed published in The Topeka Capital-Journal [13]

1990 Apr The monthly Tobacco Institute report for March from Carol Hrycaj who is in charge of the issues surrounding Excise Taxes, says

The consulting economist's excise tax/"user fee" op-ed program continues to generate results. We reviewed several draft articles and returned them to the authors for placement.
Published articles in March include: Dwight Lee, Macon Telegraph and News; Michael Babcock, The Topeka Capital-Journal: and Clifford Dobitz, the Grand Forks Herald. [14]

1990 May This is a list of the newspapers designated to certain economists on the network for another Excise Taxes article. They are to attempt to plant an op-ed article on "Excise Taxes" on this local newspapers.

KANSAS Michael Babcock, of Kansas State University has been given the Kansas City Kansas. (sic) newspaper. [15]

1990 May 7 The Tobacco Institute's "1991 Tax and Social Cost Plans" have sections on

"Social Costs" Hearings Readiness (preparation for fielding witnesses at Congressional hearings.) They list here the arguments that the Institute and its allies must be prepared to present.

"Tax" Hearing Readiness (as above, but for excise tax increases, State and Federal)

List of cash-for-comment network economists in each State.

This is an updated list with the current locations of each, with phone numbers and addresses.

1990 Aug/E Clipping of an op-ed by Babcock for the Tobacco Institute which appeared in The Manhattan Mercury Excise Taxes -- the right solution? (attacking President George Bush I and excise taxes.) [16]

1990 Aug This long document has media-tour records [being conducted by Fleishman-Hillard] for the

cash-for-comments economists network

ventilation network members (mainly HBI)

biological scientists network,

academic lawyers network

labor network and

advertising academics network

The economist's media tours are to promote the Wagner and Tollison book on the Social Cost of smoking which had been written for the Tobacco Institute. and reviewsd by many of the cash-for-comment economist network members.

Also there is attached a list of Savarese's network economist triumphs which has the intriquing heading "Consulting Economists -- Not on Philip Morris List" which suggests that PM was running a parallel operation to that of the Tobacco Institute.
This list holds the recent successes in planting op-eds on local newspapers, and a few appearances of economists at State hearings, conferences, etc.

Michael BabcockProfessor of Economics, Kansas State University 3/90 Excise Tax/"user fee" op-ed published in The Topeka Capital-Journal

1990 Aug 3 Sam Chilcote at the Tobacco Institute has advised the Members of the Executive Committee of plans to develop a celebrity speakers program using academics and other expert consultants. There are offer the speakers both money and personal promotion:

[W]hile it is clear that there are a number of individuals who can and are speaking out on our issues independent of The Institute, there also is much more that could be done. There are, for example, opportunities to develop higher profiles for those individuals with whom we enjoy an existing relationship, and to increase within the media an awareness of their availability.

There also are a number of individuals who have been identified who do not currently have a relationship with the industry, but whose views appear to be compatible with our own. Should the Executive Committee decide that it wants to proceed with an expansion of our speakers' program, these individuals would be contacted to determine their interest in our issues.

The addition of new speakers to our program will be expensive. Most of these individuals command substantial consulting fees; media and other activity will require a new commitment of funds, although an exact amount cannot be determined until candidates have been approached.

1990 Oct /E A Tobacco Institute document. It lists the services that academics and secret consultants have provided to the tobacco industry during 1989 and 1990 -- both as witnesses and as authors of articles and letters.

Pages 2 - 9 -- Advertising : lawyers and advertising administrators

Pages 10 - 30 -- Science and Public Policy on ETS/IAQ

Pages 31 - 39 -- Taxation This gives the dates of each of the services, and any 'Current Projects' they may be working on:

Michael Babcock, Professor of Economics, Kansas State University 3/90 Excise Tax/"user fee" op-ed published in The Topeka Capital-Journal. See page 34

The [TI budget papers show that each op-ed earned the economists about $3,000. Presentations to conferences earned them $5,000. Savarese was paid $70,000 to $100,000 pa for this project, and Ogilvy & Mather $250,000.See page 5

1991 Jan /E Tobacco Institute draft plan for 1991 with emphasis on "Taxes." These are the economist-related paragraphs:

Objective To discourage reliance on consumer excise taxes on cigarettes to meet social and economic objectives by demonstrating that excise taxes are regressive and inconsistent with fair taxation.
Goals and Tactics:

Commission two op-ed articles in 1991 from consulting economists. As articles are published, provide to other Institute decisions for promotion and submission to appropriate policy makers.

Conduct at least 10 presentations by consulting economists on the excise tax issue before national, regional and state tax policy conferences.

Continue to utilize consulting economists for testimony and briefings. Expand appearances to include presentations to business clubs and the business press. Conduct media refresher courses for public speaking appearance and delivery of testimony.

Utilize the consulting economists for an op-ed program that addresses the national earmarking issue and state specific earmarking issues. As articles are published, provide to other Institute divisions and promote to appropriate public policymakers. Use field staff network to support distribution efforts. [19]

1991 Jan 8 Savarese has sent the current list of network economists to Carol Hyrcaj at the Tobacco Institute. It contains three new names, but otherwise is essentially the same as the old list.